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Value of Major League Baseball Ownership

Author

Listed:
  • Rodney Fort

    () (Washington State University)

Abstract

The unwillingness of team owners to share their data prohibits a direct assessment of the value of professional team sports ownership. But insights into that value can be gleaned from actual team sale prices. First, throughout the entire modern history of Major League Baseball (MLB), the average real growth in team sale prices is twice the usual comparison value of 3% for the economy at large. Second, aggregated at the franchise level, the average rate of growth is about 1.6 times the 3% comparison. Third, the real growth rate an owner can expect from time of purchase to time of sale over the decades has been a roller-coaster ride. Fabulous growth occurred to the 1940s, fell off dramatically to the 1970s, rebounded very strongly in the 1980s, and was essentially zero in the 1990s. In addition, there appears to be a strong relationship between risk and return, owners have learned to price expansion franchises close to discounted expected future profits, the period of ownership has shown dramatic declines at two distinct points in time, and the portion of ownership value not associated with annual operations appears to be significant. This information has implications for claims of losses by owners and for future analysis.

Suggested Citation

  • Rodney Fort, 2006. "Value of Major League Baseball Ownership," International Journal of Sport Finance, Fitness Information Technology, vol. 1(1), pages 9-20, February.
  • Handle: RePEc:jsf:intjsf:v:1:y:2006:i:1:p:9-20
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. More on the Liverpool Sale
      by Brad Humphreys in International Journal of Sport Finance Blog on 2010-10-16 19:31:19
    2. Motivation for Team Ownership: Tom Ricketts and the Cubs
      by brhumphreys in International Journal of Sport Finance Blog on 2009-10-31 22:23:16

    Citations

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    Cited by:

    1. Daniel, Rascher, 2008. "Franchise Relocations, Expansions, and Mergers in Professional Sports Leagues," MPRA Paper 25809, University Library of Munich, Germany.
    2. John K. Wilson & Richard Pomfret, 2014. "Public Policy and Professional Sports," Books, Edward Elgar Publishing, number 15381.
    3. John K. Wilson & Richard Pomfret, 2009. "Government Subsidies for Professional Team Sports in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 264-275.
    4. Richard Pomfret & John K. Wilson, 2011. "The Peculiar Economics of Government Policy towards Sport," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(1), pages 85-100.
    5. N. Edward Coulson & Rodney Fort, 2010. "Tax Revisions Of 2004 And Pro Sports Team Ownership," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 464-473, October.

    More about this item

    Keywords

    value; ownership; Major League Baseball;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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